Fair Treatment, Local Support and High-Speed Internet Foster Success for Small Business

COLUMBIA, MO - Entrepreneurship is increasing in popularity as a tool for stimulating local economic growth and development. Some factors that may influence a community's entrepreneurial climate include quality of life, business services, community size and financial resources. To better understand the impact of these factors, Tom Johnson, a professor in the Truman School of Public Affairs at the University of Missouri, evaluated data on entrepreneurial climate from 158 small business owners in 12 rural Missouri communities.

"Creating a climate in which entrepreneurs and their businesses can thrive is crucial to increasing entrepreneurial activity and success within a community" said Johnson, director of MU's Community Policy Analysis Center (CPAC) and the Frank Miller Professor of Agricultural Economics in the MU College of Agriculture, Food and Natural Resources. "There is an increased need to understand what factors influence this climate from the perspective of business owners with regard to their specific community, town and region."

Johnson found entrepreneurial climate is directly associated with entrepreneurs' perceptions of fair treatment, level of local patronage, and the availability of business networks and high-speed internet. Positive perceptions of these factors reflected a successful environment. Other factors such as community quality of life, proximity to metro areas, local government support, and the availability of business services and financial resources did not have a significant effect on entrepreneurs' success, according to Johnson.

"Surprisingly, several factors are not problems or assets for small business owners. The business owners were most satisfied with the availability of business services and their communities' quality of life," he said. "The key to their success was the support they received on a day-to-day basis and the patronage of their neighbors. Owners were least satisfied with local government support and availability of financial resources and small business training. This implies an enhanced role for developers in these communities to facilitate the needs and opportunities for new businesses in the areas of financing and training."

Data were collected using a series of self-assessment surveys, which can be adapted by researchers for further study in other communities. Johnson and researchers at CPAC, in partnership with Missouri Rural Development Partners, developed the surveys as part of a guidebook on a community-based approach to starting a new business, which is available to the public online at: http://www.cpac.missouri.edu/topics/rural_entrepreneurship/rei_guidebook.pdf

"Findings of this study provide valuable information for policy makers, researchers measuring entrepreneurship and entrepreneurial climate, and communities seeking to improve their level of entrepreneurial activity," Johnson said. "However, this study was limited to current business owners and suggests the need for further research comparing surveys from former and failed business owners and the general public."

The study, "Community Entrepreneurial Climate: An Analysis of Small Business Owners Perspectives," will be published in the Journal of Rural and Community Development. Darryl Chatman, MU law student, and Ira Altman, assistant professor at Southern Illinois University, co-authored the study.